Ho Ho Ho - Sorry, No Santa Claus Rally This Year

Well folks we're down to the final day (half day actually) before Christmas and it doesn't look like Santa will make it this year. I contend that there was a rally, it was the week of Thanksgiving and the week after. However, since that time we've given a good chunk of it back.

So, where are things? Just kind of stuck, like last week. Even with low volume days this week the Dow has had 5 straight losing sessions. There simply isn't any incentive to buy right now. I also anticipated some tax selling to take place. Sell for a loss so you can at least get Uncle Sam to give some of it back.

The chart patterns are still iffy. Half the folks I follow say we're headed for a rally and the other half think we're in a leg down. I'm still hoping for a final down move before a very sizable rally starts up.

Housing numbers came out today and they were UGLY. Average home price is now $181k, down from the peak of $230k. Sales are way down, with the exception of foreclosured homes.

There is a lot of hope that by mid year 2009 things will be turning around. I simply don't see it folks. Everything is still in decline. Remember, the markets look forward 6 months. They don't expect to see things getting better right now. What they want to see is the rate of declines to slow down... home prices, foreclosures, retail sales, etc. But we have a long way to go.

I expect there to be a honeymoon of sorts with Obama taking office. He'll announce even more programs and there will be dancing in the streets... but the reality is no matter how many trillions the gov't throws at the problem, it won't be enough.

In a way a lot of this is a self fulfilling prophecy. As people get scared of losing their job, they stop spending. As spending slows down, companies cut back, including layoffs. You can imagine how this loop can go round and round. But how can you convince people to spend again. Nobody has any money. They borrowed to buy everything they already have.

How about the "customers" of Madoff... lost everything. There will be lawsuits for years. And now they're saying that even people that were fortunate enough to have pulled their money out prior to the shutdown may have to give back all of their profits. What a mess.

If scandals like this keep coming, people will not want to invest in the stock market. Exactly what happened back in the 1930's. People got burned and refused to ever get back in. History doesn't necessarily repeat, but it does rhyme...